India and Iran Sign a 10-Year Agreement to Manage the Chabahar Port
India has a short-term arrangement that is regularly extended to run the Chabahar Port.
- India Ports Global Ltd. & Ports and the Iranian Maritime Organisation have inked a long-term (ten-year) agreement to manage the Shahid Beheshti Port in Chabahar. For the first time, India will assume control of an international port.
- Importance of the Contract:
Until now, shippers and investors have been discouraged from investing in port operations due to Iran’s geopolitical difficulties and the short-term deal. However, the long-term agreement will enable more significant investment by industry participants.
About the Chabahar Port
- With Indian assistance, Tehran is building its first deepwater port to improve connectivity and commercial ties.
- Location: It lies on the Gulf of Oman, Iran’s energy-rich southern coast in the Sistan-Balochistan province.
- In 2002, both nations inked a roadmap for strategic collaboration, signalling the start of the development project in Chabahar.
- In 2016, India, Iran, and Afghanistan signed a trilateral agreement to build an international commerce corridor with Chabahar as a primary transit hub.
- The first phase of the Shahid Beheshti port opened in December 2017, the same year that India shipped its first wheat shipment via Chabahar to Afghanistan.
- Operating Agency: India Ports Global Limited (IPGL), a state-owned company, was established in 2015 to develop ports abroad.
- The project Chabahar consists of the Shahid Kalantari and Shahid Beheshti, two separate ports. India is investing only in the Shahid Beheshti port, which will have an annual capacity of 82 million tonnes after four phases of development.
Chabahar’s Strategic Importance
- New Delhi seeks new economic routes to Central Asia and Europe to reduce land transit dependency on Pakistan.
- Chabahar port is a key link for the International North-South Transport Corridor (INSTC). The INSTC is a 7200km multi-mode transport route from the Indian Ocean and Persian Gulf to the Caspian Sea via Iran and northern Europe via Saint Petersburg, Russia.
- Chabahar Port is easily accessible from India’s western shores. Given Red Sea geopolitical concerns, it is crucial for India and Iran to minimise their dependency on the Suez Canal for freight delivery to Europe. INSTC shipments take 15 days less than Suez Canal shipments, opening India’s commerce potential with Europe.
- As of January 2018, the Research and Information System for Developing Countries (RIS) projected $85 million in Indian investment in the Chabahar project, with $500 million in Indian exposure.
- India is interested in investing in Chabahar, which is west of Iran’s border with Pakistan and near Gwadar.
- China is building Gwadar port in Pakistan for Belt and Road. India’s Chabahar security is vital to its economy, security, and strategy.
- Chabahar might help Iran cope with Western sanctions and assist landlocked Afghanistan in reducing its dependence on Pakistan for Indian Ocean access.
- Kazakhstan and Uzbekistan, resource-rich but landlocked Central Asian nations, regard Chabahar as a route to the Indian Ocean and Indian market. The port will benefit Indian traders and investors interested in Central Asia.
